Yes, Dialup Market Still Shrinking

One of the fallacies we've seen since the recession started is that there would be some significant, rejuvenated interest in dialup Internet service -- because it's a few bucks a month cheaper than DSL, and because it's good enough for some people.

Well, that's not what EarthLink, one of the top U.S. dialup ISPs, saw last quarter. EarthLink announced today that it lost a net 160,000 consumer dialup subscribers during Q1 -- more than 9% of its subscriber base -- finishing the quarter with 1.59 million subs. (To put that in perspective, 1.6 million people activated new, $100/month iPhones with AT&T last quarter.)

To be sure, EarthLink did experience a slower rate of subscriber decline than a year ago. During Q1 '08, EarthLink lost 256,000 net dialup subs, or a 9.8% drop. And gross customer growth -- 116,000 new sign-ups during Q1 '09 -- was flat with Q4 '08, despite lower marketing spend.

But either way, there's nothing here that supports the idea that there is any sort of broad movement to last decade's technology. Meanwhile, EarthLink is still making a profit while its business shrinks. The company made $32.5 million on $199 million of revenue during Q1.